Using Financial Accounting Information
10th Edition
ISBN: 9781337276337
Author: Porter, Gary A.
Publisher: Cengage Learning,
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Chapter 3, Problem 3.2.2P
To determine
Introduction: ‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period.
To prepare: Income statement for the month of May.
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J. Kamas and G. Charrier have been operating a catering business for several years. In March, the partners plan to expand by opening a retail sales shop. They have decided to form the business as a corporation called Traveling Gourmet, Incorporated. The following transactions occurred in March:
Received $96,000 cash from each of the two shareholders to form the corporation, in addition to $3,600 in accounts receivable, $8,500 in equipment, a van (equipment) appraised at a fair value of $16,200, and $2,000 in supplies. Gave the two owners each 820 shares of common stock with a par value of $1 per share.
Purchased a vacant store for sale in a good location for $520,000, making a $104,000 cash down payment and signing a 10-year mortgage note from a local bank for the rest.
Borrowed $66,000 from the local bank on a 10 percent, one-year note.
Purchased food and paper supplies costing $13,400 in March; paid cash.
Catered four parties in March for $5,800; $1,920 was billed and the rest was…
Journalize the transactions for the month of July.
July
1
Judar deposited $135,000 in a bank account for the purpose of buying Blast Off! The business is a recreation area offering three large waterslides (called “tubes”)—one children’s slide, an inner tube run, and a looping extreme slide.
2
Bought Blast Off! in its entirety for a total price of $540,800. The assets include pool furniture, $3,800; the pool/slide facility (includes filter system, pools, pump, and slides), $148,800; building, $96,200; and land, $292,000. Paid $120,000 down and signed a mortgage note for the remainder.
2
Received and paid the bill for a one-year premium for insurance, $12,240.
2
Bought 125 inner tubes from Worn Tires for $1,225, paying $500 down, with the remainder due in 20 days.
3
Signed a contract with a video game company to lease space for video games and to provide a food concession. The rental income agreed upon is 10 percent of the revenues generated from the machines and food, with the…
Prepare the general journal entries for the following transactions.
Mr. Laban Deyro opened his laundry business in Iloilo City on January 2, 2016. The following transactions occurred during the month of January 2016:
DATE
TRANSACTIONS
1/2/16
Invested PHP500,000 to his business. The trade name
1/3/16 Hired Allan and Allie who will manage his business
1/4/16
Collections from various customers for the day- PHP3,000
1/5/16
of the business was "MR. LABANDERO"
Purchase store supplies from Labada Store - PHP10,000
1/7/16 Collections from various customers for the day - PHP8,000
1/8/16 MR. LABANDERO entered into an exclusive contract with Sikat Hotel where the business will do all the laundry of the hotel.
1/9/16 Sikat Hotel availed the services of MR. LABANDERO amounting to PHP15,000. Payment will be made on
January 20, 2016.
1/10/16
Collections from various customers for the day- PHP12,000
1/12/16 Purchase a washing machine amounting to PHP50,000
1/15/16 Collections from various customers…
Chapter 3 Solutions
Using Financial Accounting Information
Ch. 3 - Prob. 3.1ECh. 3 - Prob. 3.2ECh. 3 - Prob. 3.3ECh. 3 - Prob. 3.4ECh. 3 - Prob. 3.5ECh. 3 - Prob. 3.6ECh. 3 - Prob. 3.7ECh. 3 - Prob. 3.8ECh. 3 - Prob. 3.9ECh. 3 - Prob. 3.10E
Ch. 3 - Prob. 3.11MCECh. 3 - Prob. 3.12MCECh. 3 - Prob. 3.13MCECh. 3 - Prob. 3.14MCECh. 3 - Prob. 3.15MCECh. 3 - Prob. 3.16MCECh. 3 - Prob. 3.17MCECh. 3 - Prob. 3.18MCECh. 3 - Prob. 3.1PCh. 3 - Prob. 3.2.1PCh. 3 - Prob. 3.2.2PCh. 3 - Prob. 3.2.3PCh. 3 - Prob. 3.2.4PCh. 3 - Transaction Analysis and Financial Statements...Ch. 3 - Prob. 3.3.2PCh. 3 - Prob. 3.3.3PCh. 3 - Prob. 3.3.4PCh. 3 - Prob. 3.4PCh. 3 - Prob. 3.5.1MCPCh. 3 - Prob. 3.5.2MCPCh. 3 - Prob. 3.5.3MCPCh. 3 - Prob. 3.6.1MCPCh. 3 - Transaction Analysis and Financial Statements Blue...Ch. 3 - Prob. 3.6.3MCPCh. 3 - Prob. 3.6.4MCPCh. 3 - Prob. 3.7.1MCPCh. 3 - Prob. 3.7.2MCPCh. 3 - Transaction Analysis and Financial Statements...Ch. 3 - Prob. 3.8MCPCh. 3 - Prob. 3.9.1MCPCh. 3 - Problem 3-9 Transaction Analysis and Journal...Ch. 3 - Prob. 3.10.1MCPCh. 3 - Prob. 3.10.2MCPCh. 3 - Prob. 3.10.3MCPCh. 3 - Prob. 3.10.4MCPCh. 3 - Prob. 3.11MCPCh. 3 - Prob. 3.12.1MCPCh. 3 - Prob. 3.12.2MCPCh. 3 - Prob. 3.13.1MCPCh. 3 - Prob. 3.13.2MCPCh. 3 - Prob. 3.14.1MCPCh. 3 - Prob. 3.14.2MCPCh. 3 - Prob. 3.14.3MCPCh. 3 - Prob. 3.14.4MCPCh. 3 - Prob. 3.14.5MCPCh. 3 - Prob. 3.15.1MCPCh. 3 - Prob. 3.15.2MCPCh. 3 - Prob. 3.15.3MCPCh. 3 - Prob. 3.15.4MCPCh. 3 - Prob. 3.1AAPCh. 3 - Prob. 3.2.1AAPCh. 3 - Transaction Analysis and Financial Statements...Ch. 3 - Transaction Analysis and Financial Statements...Ch. 3 - Prob. 3.3.1AAPCh. 3 - Transaction Analysis and Financial Statements...Ch. 3 - Transaction Analysis and Financial Statements...Ch. 3 - Prob. 3.3.4AAPCh. 3 - Prob. 3.4AAPCh. 3 - Prob. 3.5.1AAMCPCh. 3 - Prob. 3.5.2AAMCPCh. 3 - Prob. 3.5.3AAMCPCh. 3 - Prob. 3.6.1AAMCPCh. 3 - Prob. 3.6.2AAMCPCh. 3 - Prob. 3.7.1AAMCPCh. 3 - Prob. 3.7.2AAMCPCh. 3 - Prob. 3.8AAMCPCh. 3 - Prob. 3.9.1AAMCPCh. 3 - Prob. 3.9.2AAMCPCh. 3 - Prob. 3.10.1AAMCPCh. 3 - Prob. 3.10.2AAMCPCh. 3 - Prob. 3.10.3AAMCPCh. 3 - Prob. 3.10.4AAMCPCh. 3 - Prob. 3.11AAMCPCh. 3 - Prob. 3.12.1AAMCPCh. 3 - Prob. 3.12.2AAMCPCh. 3 - Prob. 3.13.1AAMCPCh. 3 - Prob. 3.13.2AAMCPCh. 3 - Prob. 3.14.1AAMCPCh. 3 - Prob. 3.14.2AAMCPCh. 3 - Prob. 3.15.1AAMCPCh. 3 - Prob. 3.15.2AAMCP
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- Aggressive Corporation approaches Matt Taylor, a loan officer for Oklahoma State Bank, seeking to increase the company's borrowings with the bank from $100,000 to $150,000. Matt has an uneasy feeling as he examines the loan application from Aggressive Corporation, which just completed its first year of operations. The application included the following financial statements. The income statement submitted with the application shows a net income of $30,000 in the first year of operations. Referring to the balance sheet, this net income represents a more-than-acceptable 15% rate of return on assets of $200,000. Matt's concern stems from his recollection that the $100,000 note payable reported on the balance sheet is a three-year loan from his bank, approved earlier this year. He recalls another promising new company that, just recently, defaulted on its loan due to its inability to generate sufficient cash flows to meet its loan obligations. Seeing Matt's hesitation, Larry Bling, the CEO…arrow_forwardThe following are the transactions relating to the formation of Gray Mowing Services Inc. and its first month of operations. A. The firm was organized and the initial stockholders invested cash of $12,000. B. The company borrowed $18,000 from a relative of one of the initial stockholders; a short-term note was signed. C. Two zero-turn lawn mowers costing $7,600 each and a professional trimmer costing $2,600 were purchased for cash. The original list price of each mower was $10,200, but a discount was received because the seller was having a sale. D. Gasoline, oil, and several packages of trash bags were purchased for cash of $1,800. E. Advertising flyers announcing the formation of the business and a newspaper ad were purchased. The cost of these items, $3,400, will be paid in 30 days. F. During the first two weeks of operations, 94 lawns were mowed. The total revenue for this work was $14,100; $9,300 was collected in cash, and the balance will be received within 30 days. G. Employees…arrow_forwardRequired information [The following information applies to the questions displayed below] J. Kamas and G. Charrier have been operating a catering business for several years. In March, the partners plan to expand by opening a retail sales shop. They have decided to form the business as a corporation called Traveling Gourmet, Incorporated. The following transactions occurred in March a. Received $80,000 cash from each of the two shareholders to form the corporation, in addition to $2,000 in accounts receivable, $5,300 in equipment, a van (equipment) appraised at a fair value of $13,000, and $1,200 in supplies. Gave the two owners each 500 shares of common stock with a par value of $1 per share. b. Purchased a vacant store for sale in a good location for $360,000, making a $72,000 cash down payment and signing a 10-year mortgage note from a local bank for the rest. c. Borrowed $50,000 from the local bank on a 10 percent, one-year note. d. Purchased food and paper supplies costing 10,200…arrow_forward
- Aggressive Corporation approaches Matt Taylor, a loan officer for Oklahoma State Bank, seeking to increase the company’s borrowings with the bank from $100,000 to $150,000. Matt has an uneasy feeling as he examines the loan application from Aggressive Corporation, which just completed its first year of operations. The application included the following financial statements. The income statement submitted with the application shows net income of $30,000 in the first year of operations. Referring to the balance sheet, this net income represents a more-thanacceptable 15% rate of return on assets of $200,000. Matt’s concern stems from his recollection that the $100,000 note payable reported on the balance sheet is a three-year loan from his bank, approved earlier this year. He recalls another promising new company that, just recently, defaulted on its loan due to its inability to generate sufficient cash flows to meet its loan obligations. Seeing Matt’s hesitation, Larry Bling, the CEO…arrow_forwardKaylee James, a connoisseur of fine chocolate, opened Kaylee's Sweets in Collegetown on February 1. The shop specializes in a selection of gourmet chocolate candies and a line of gourmet ice cream. You have been hired as manager. Your duties include maintaining the store's financial records. The following transactions occurred in February, the first month of operations. Received four shareholders' contributions totaling $28,400 cash to form the corporation; issued 500 shares of $0.10 par value common stock. Paid three months' rent for the store at $1,830 per month (recorded as prepaid expenses). Purchased and received candy inventory for $6,400 on account, due in 60 days. Purchased supplies for $1,330 cash. Negotiated and signed a two-year $13,000 loan at the bank, receiving cash at the time. Used the money from (e) to purchase a computer for $2,700 (for recordkeeping and inventory tracking); used the balance for furniture and fixtures for the store. Placed a grand opening…arrow_forwardIn June 2011, Wendy Winger organized a corporation to provide aerial photography services. Thecompany, called Aerial Views, began operations immediately. Transactions during the month ofJune were as follows: June 1 The corporation issued 60,000 shares of capital stock to Wendy Winger in exchangefor $60,000 cash. June 2 Purchased a plane from Utility Aircraft for $220,000. Made a $40,000 cash downpayment and issued a note payable for the remaining balance. June 4 Paid Woodrow Airport $2,500 to rent office and hangar space for the month. June 15 Billed customers $8,320 for aerial photographs taken during the first half of June. June 15 Paid $5,880 in salaries earned by employees during the first half of June. June 18 Paid Hannigan’s Hangar $1,890 for maintenance and repair services on thecompany plane. June 25 Collected $4,910 of the amounts billed to customers on June 15. June 30 Billed customers $16,450 for aerial photographs taken during the second halfof the month. June 30…arrow_forward
- The following events pertain to Outdoor Entertainment Incorporated which specializes in hosting outdoor music festivals across the nation: Borrowed $116,000 cash from a local bank to assist in funding the next outdoor festival. Paid $33,000 cash for supplies related to the festival. Received $158,000 cash for ticket sales related to the festival. Paid $53,200 in cash for employee salaries. Required: Record each of the following Outdoor Entertainment Incorporated events in T-accountsarrow_forwardMr. Y opens an apartment-locator business near a Green University campus. The corporation will be named Campus Apartment Locators, Inc. During the first month of operations, July 2022, the business completes the following transactions: a. Mr. Y invests 350,000. The business receives 350,000 cash and issues common stock to Mr. Y. b. Purchases 3500 of office supplies on account. c. Pays cash of 30,000 to acquire a lot next to the campus. Mr. Y intends to use the land as a future building site for the business office. d. Locates apartments for clients and receives cash of 10,900. e. Pays 1000 on the account payable he created in transaction b. f. Pays 20,000 of personal funds for a vacation. g. Pays cash expenses for office rent, 4000, and utilities, 1000. h. Returns office supplies of 2500 from transaction b. i. Declares and pays a cash dividend of 10,200. Requirements: 1. Analyze the preceding transactions in terms of their effects on the accounting equation of Campus Apartment…arrow_forwardAssume Down, Incorporated, was organized on May 1 to compete with Despair, Incorporated—a company that sells de-motivational posters and office products. Down, Incorporated, encountered the following events during its first month of operations. Received $34,000 cash from the investors who organized Down, Incorporated Borrowed $19,000 cash and signed a note due in two years. Ordered equipment costing $16,000. Purchased $10,000 in equipment, paying $2,000 in cash and signing a six-month note for the balance. Received the equipment ordered in (c), paid for half of it, and put the rest on account. Prepare a classified balance sheet at May 31. Include Retained Earnings with a balance of zero.arrow_forward
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